How disruptive technology affects us
December 13, 2017
My youngest son Noel thought an example of disruptive technology was when someone answers a cellphone while in the middle of another conversation. He isn't totally wrong, but for the purpose of this column, I am referring to new technology that completely disrupts an industry.
The most well-known examples include web-based apps that are changing the world — literally. Ride-sharing apps like Uber and Lyft are slowly putting taxis out of business. YouTube, Netflix and others are forcing conventional cable companies to rethink their business model. And who knows how many industries drones will radically change.
My conversation with my son got me thinking about what has been or will be totally disruptive to local governments like the town of Carbondale. Virtually all disruptive technologies affect local government to some degree. Some are, or will be, game-changers, and some will have an incremental effect over time. Either way, local governments have no choice but to find a way to adapt.
We have already had to address many different types of disruptive technologies at some level. They include short-term rentals, body cameras for police, cyber security threats, and the legalization of marijuana. Yes its true legalization was a policy change, but believe me, the new technology of how the industry delivers the product is mind-blowing — and disruptive in multiple ways.
A troubling disruption for me as it relates to local government is economic in nature. In Colorado we have put our proverbial eggs firmly in the sales tax basket. Unlike eastern states that rely much more heavily on property tax, we rely on the consumption of goods bought locally. In Carbondale roughly 70 percent of our general fund revenue is generated through sales tax, and approximately 4 percent comes from property tax. This heavy reliance on sales tax leaves few alternatives for municipalities to grow (i.e. adapt) other than chase more retail development.
Enter Amazon, eBay, and e_(fill in the blank)_.com. Internet shopping has been a massive disrupter to the sales tax conundrum mentioned above. Local retailers are definitively feeling the pinch, and that 5-10 percent of local purchases that used to help fill potholes, sponsor youth sports, or police our streets is starting to vanish or be redirected to e_(fill in the blank)_.com headquarters. It's enough of a disrupter to make me question what economic prosperity looks like in the future.
Recommended Stories For You
I would argue that Carbondale is thriving in many ways, but we still have some vacancies downtown, and it's a puzzle to think how towns — and local retail businesses, for that matter — can plan for growth in a world where we increasingly buy from a screen rather than our neighbor. There are other disrupting economic trends that affect the other 30 percent of Carbondale's revenue, but I'll save those for another column.
While the internet shopping trend is troubling, I am optimistic that declining sales tax revenue isn't an immediate concern for Carbondale. I would opine that we are more self-sustaining than many towns because our retail base is largely supported by our local economy rather than heavily dependent on regional shoppers. We are also focusing on fostering businesses that provide living wages to folks that can then support the stable of local businesses we are fortunate to have. In fact I'm pleased to report a new business, Why Cycles, recently relocated to Carbondale.
One of the more exciting disrupters to me is the new frontier of electricity. Here is an industry that hasn't fundamentally changed its business model for over a century. It has relied on the model of large power plants, predominantly fueled by coal, located in a few central locations in each state, distributing electricity over thousands of miles on aging infrastructure, in a very regulated market.
Now utilities are scrambling to update their model to adapt to overwhelming investment in decentralized renewable energy that is cleaner and, yes, cheaper. Now electricity consumers can choose to create their own power locally or buy it from solar gardens. In an effort to pursue our goal of carbon neutrality and expedite the inevitable transition to renewable energy, the town of Carbondale recently approved a contract for solar electricity with Microgrid that is cheaper than conventional electricity on day one.
As more public and private entities continue to add electric vehicle charging stations, thus enabling the electrification of transportation, disruption to electric utilities, the petroleum industry and the auto industry is in full swing. When our contract with Microgrid goes live we'll be at 50 percent +/- renewable electricity, but I'm optimistic that it won't be long before 100 percent of Carbondale's energy, including transportation, will be cleaner, cheaper and locally produced. That's what I call healthy disruption.
Dan Richardson is Carbondale mayor.